Calif., Other State Exchanges Prepare for Financial Independence
California and the 12 other states, and Washington, D.C., that opted to run their own health insurance exchanges are reporting varied levels of preparedness as they near a January deadline to be financially self-sustaining, as required under the Affordable Care Act, AP/U.S. News & World Report reports.
The board of California's exchange, Covered California, has estimated that the exchange will have a $250 million reserve for 2015, funded in part by a $13.95 monthly surcharge for individual plans. In addition, the state earlier this year announced plans to put aside $184 million in federal funds to cover projected shortfalls through 2016.
Details of Other States
Meanwhile, Rhode Island officials have said they lack a plan for the long-term funding of their state exchange, HealthSource RI, which costs roughly $17 million per year. According to AP/U.S. News & World Report, some state lawmakers have suggested shifting over to the federal exchange. However, HealthSource RI Director Christine Ferguson said the move would be short-sighted and could have additional costs.
Officials in other states operating their own exchanges also have outlined funding plans. For example:
- New York is using the general revenue from two state agencies to help cover exchange costs;
- Maryland is using an existing 2% tax on exchange plans;
- Colorado has cut exchange spending by 18% and has approved a 1.4% fee on exchange plan premiums and a $1.25 "general market" fee on small group and individual plans, including those not sold on the exchange;
- Washington, D.C., is funding its exchange with a 1% tax on all insurance policies, including those not sold on the exchange; and
- Vermont is funding its exchange with a health care provider tax, although officials said the state could have a $20 million shortfall by the end of 2014.
Critics Call Cost-Shifting Revenue Sources Unfair
Some insurers and lawmakers have voiced disapproval about funding exchanges by shifting costs to those who do not use exchange plans.
For example, the American Council of Life Insurers is suing over Washington, D.C.'s tax, alleging it is unfair to tax products that are not available on the exchange. Meanwhile, some Colorado lawmakers have taken issue with the state's general market fee (Niedowski, AP/U.S. News & World Report, 11/23).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.